Law guide: Employment

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Meaning of dismissal

Meaning of dismissal

The meaning of dismissal

In the first instance, your employees must establish that they have been dismissed within the meaning of the Employment Rights Act 1996 (or Employment Rights (Northern Ireland) Order 1996). If the employee resigns (without it amounting to constructive dismissal - see below) or leaves by mutual agreement or the contract is frustrated, there has not been a dismissal. The employee will not be eligible to pursue a statutory claim for redundancy payment or a claim for unfair dismissal.

In terms of the Act (and the Order), dismissal can arise in one of three ways:

  • The contract is terminated by the employer
  • A fixed term expires without being renewed
  • The employee is constructively dismissed

Actual dismissal

Your employee is treated as being dismissed if you terminate the contract of employment by notice or without notice. This includes the most common of the three dismissal situations, where you simply give notice in accordance with the terms of the contract.

It also covers the situation where you terminate the contract without notice, dismissing your employee summarily. In this case, even though the dismissal has been provoked by your employee's conduct, it is your action in treating the contract as having come to an end which terminates the contract and thus constitutes a dismissal.

For example, if your employee is absent without leave and you refuse to allow that employee to return to work, this will operate as a dismissal.

In certain circumstances, for example, where you speak to your employee in a disrespectful manner, you may well be in breach of an implied term of mutual trust and confidence and this may amount to constructive dismissal.

Where you offer your employee a choice to resign or be dismissed and they choose to resign, as you have forced this upon your employee, it will be treated as a dismissal.

A fixed term expires without being renewed

Where a fixed-term contract expires without being renewed, your employee is treated as being dismissed. The dismissal must be on the grounds of one of the following reasons:

  • The capability of the employee
  • The employee's conduct
  • Breaching a statutory requirement
  • Redundancy
  • Some other substantial reason that justifies the dismissal of the employee.

If the fixed-term contract is not renewed and the employee is dismissed unfairly, then they could claim unfair dismissal.

A fixed term contract may contain a 'break' clause under which either you or your employee would be entitled to terminate the contract by giving notice before the term expires. If the contract expires by reaching the end of the term and the contract is not renewed, this constitutes a dismissal.

The employee is constructively dismissed

Where your conduct amounts to a fundamental breach of the employment contract and your employee leaves your employ by terminating the contract, with or without notice, it is said that they have been constructively dismissed. If you breach an express term of the contract, for example you unilaterally reduce wages, and your employee elects to leave, this will be treated as constructive dismissal.

A breach of implied duty of mutual trust and confidence may also result in constructive dismissal. However, any breach of contract, whether express or implied, must be sufficiently serious to amount to a fundamental breach of contract. If the breach is of a minor nature, constructive dismissal will not result.

A threat to change the terms and conditions of employment and to dismiss an employee if they do not accept the changes can amount to a constructive dismissal even if there is a resignation before implementation of the changes. It is possible to look to the cumulative effects of your actions.

The final act may not in itself amount to fundamental breach of contract but could be the 'last straw' entitling your employee to claim constructive dismissal. Should your employee wish to rely on constructive dismissal, they must leave your employ within a reasonable period following the breach to avoid being taken as having confirmed the contract.

The employee must resign in response to your fundamental breach of the contract and will not be constructively dismissed if the resignation is for some other reason.

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